There may be some light at the end of the 400% tax increase tunnel staring down craft spirits makers across the country. Major alcoholic beverage industry Associations have banded together to help make a temporary tax reduction permanent. In these crazy legislative times anything is possible but the good news is the Craft Beverage Modernization and Tax Reform Act has made it passed one big hurdle and it is now included in the year-end legislative package.
“This is a huge sigh of relief for struggling craft distillers who have been on pins and needles awaiting the outcome of these discussions,” said Distilled Spirits Council of the United States – DISCUS President & CEO Chris Swonger. “While not yet a done deal, making the reduced tax rates permanent will serve as an economic lifeline for beleaguered small distilleries that have had their tasting rooms shut down for months. We will continue to urge Congress to pass this critical piece of legislation, which will protect jobs, boost communities and get these small businesses back on a path of stability and growth.”
The Craft Beverage Modernization & Tax Reform Act of 2019 (S.362/H.R.1175), introduced by Senators Ron Wyden (D-Ore.) and Roy Blunt (R-Mo.) and by Representatives Ron Kind (D-Wis.) and Mike Kelly (R-Pa.), includes reforms enacted in 2017 that create a fair and equitable tax structure for brewers, winemakers, distillers and importers of all beverage alcohol. The tax reduction was renewed for 1 year in 2019 and was set to expire on Dec. 31, 2020.
Under the Act, distillers pay a reduced excise tax rate of $2.70 per proof gallon for the first 100,000 proof gallons of distilled spirits (most craft distillers fall into this category); a rate of $13.34 per proof gallon for the next 22,130,000 proof gallons of distilled spirits; and a rate of $13.50 per proof gallon for production in excess of 22,230,000 proof gallons.
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Wyden Statement on End-Of-Year Extenders Package
Senate Finance Committee Ranking Member Ron Wyden, D-Ore., released the following statement on the tax extenders package he negotiated with his counterparts on the Senate Finance and House Ways & Means Committees.
“Our agreement addresses expiring tax provisions that are critical for families, small businesses and our clean energy future.”
“In major wins for Oregon, tax incentives I developed for craft brewers, vintners and distillers are made permanent, and the low-income housing tax credit is expanded to help our state recover from this year’s catastrophic wildfires. I’ve seen firsthand how incentives for craft beverage producers have helped Oregon small businesses grow, hire and provide new benefits to their workers. Extending these breaks is especially important given how hard the pandemic has hit these small businesses. In terms of housing, thousands of Oregonians’ homes were destroyed in this year’s fires, and increasing subsidies for affordable housing is an important piece of the puzzle as we rebuild.”
Though Senator Wyden only mentions Oregon, if approved the Craft Beverage Modernization & Tax Reform Act of 2019 would help all distillers across the country.
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